Kamak Plastics Ltd. vs Commissioner of Income Tax

Mrs. T. Meenakumari, J.—The writ petitions are for the issue of writ of certiorarified mandamus to call for the records relating to the

petitioner in C. No. 1241-II/42 to 44 of 1988 dated 2-11-1989, passed u/s 264 of the Income Tax Act, 1961 (hereinafter referred to as ''the

Act'') and, consequently, direct the first respondent to grant relief in respect of interest claimed for the assessment years 1981-82, 1982-83 and

1983-84.

The assessee is a company. The learned counsel for the petitioner has argued that for the assessment year 1981-82, the petitioner has filed a

return of income on 30-10-1981 and similarly for the assessment years 1982-83 and 1983-84, the petitioner filed the return of income. Appeals

were preferred u/s 144 of the Act to set aside the assessment. Thereafter, the revisions were also filed. It has been contended that the assessee did

not claim interest taken from the bank. In the revisions filed the assessee claimed that the petitioner''s unit was a sick unit and the bank did not

charge interest and subsequently the company started getting profits. The bank has decided to charge interest for the earlier years also. Basing on

that, the assessee calculated interest at the rate of 15 per cent as allowable expenditure. The above request was rejected by the respondent-

department on the ground that it was out of time. It has also been stated that the interest can be said to be payable only when it was debited in the

assessee''s or in the bank''s books. In the revision, the Commissioner has observed that ""in fact it is seen that the bank had originally agreed to

waive the interest on the loans. It is noticed from the bank''s letter dated 11-10-1989 that they had not yet debited the interest in the loan accounts

and that they wanted specific time bound programme from the assessee in this regard. While disposing of the case, the Commissioner did not take

into consideration the above letter. He has dismissed the revisions on the ground that the petitions were out of time and without jurisdiction. A

reading of the bank''s letter dated 11-10-1989 shows that they are going to debit the uncharged interest. As there is no finding by the

Commissioner on the bank''s letter, I feel it is just and proper to remand the matter back to the Commissioner to hear the matter afresh and pass

appropriate orders taking into consideration the bank''s letter dated 11-10-1989. So far as the question of limitation is concerned, it has been

argued by the learned counsel for the petitioner that as soon as the bank has charged the interest, the petitioner has rushed to the Income Tax

authorities claiming that it is allowable expenditure. I agree with the contentions of the learned counsel for the petitioner. The finding of the

Commissioner that the petitions were out of time is set aside. The Commissioner, first herein, is directed to pass appropriate orders.

The impugned order is quashed. The writ petitions are allowed. No costs.